Starting a business often begins with a practical question: should you operate as a sole trader, through a trust, or register a company? If you decide a company is the right fit, getting the registration right from the beginning can make it easier to manage ownership, banking, tax registrations, record keeping and future growth.
Company registration is more than choosing a business name and paying an application fee. A company is a separate legal structure with directors, shareholders, ongoing reporting responsibilities and its own tax and accounting obligations. Taking the time to set up the structure properly can help avoid costly corrections later.
Decide whether a company is the right structure
Before registering, consider whether a company suits the way you intend to run the business.
A company is a separate legal entity. It can enter into contracts, own assets, employ people and earn income in its own name. This is different from a sole trader structure, where the individual and the business are generally treated as the same legal entity.
For many small business owners, a proprietary company limited by shares is the most familiar company structure. It is commonly identified by “Pty Ltd” at the end of its name.
A company may be worth considering where you want to:
- bring in one or more business partners or investors;
- separate business activities from your personal affairs;
- establish a formal ownership structure through shares;
- retain profits in the business for working capital or growth, subject to appropriate tax advice;
- employ staff or engage contractors through a separate entity;
- create a structure that may be easier to transfer or sell in the future.
However, registering a company is not automatically the best option simply because a business is growing. Companies involve annual review fees, bookkeeping requirements, company records, tax returns and directors’ responsibilities. Moving business assets, contracts or employees into a company can also have tax, duty, employment law and commercial consequences.
It is important not to assume that a company provides complete protection from personal liability in every situation. Directors can have personal responsibilities under company, tax and employment laws. Personal guarantees given to lenders, landlords or suppliers can also expose an individual to risk.
A structure review before registration is often useful, particularly where there are multiple owners, valuable assets, a family trust, significant borrowing, employees or plans to buy property.
Choose the key company details before applying
Most registration delays happen because the core decisions have not been made before the application starts. Preparing these details first makes the process smoother and helps ensure that the company records reflect the intended arrangement.
Choose a company name
You can register a company with a chosen name, provided it is available and meets the relevant naming rules. If you do not choose a name, the company can be registered using its Australian Company Number followed by its legal status.
A company name is not necessarily the same as a business name. If the company trades under a name that is different from its registered company name, it may also need to register that trading name as a business name.
For example, a company might be registered as “Harbour Consulting Pty Ltd” but trade publicly as “Harbour Business Solutions”. In that case, the trading name may need separate business name registration.
Before settling on a name, consider:
- whether a similar company or business name already exists;
- whether the name reflects your intended services or products;
- whether it could cause confusion with an existing business;
- whether it is suitable if the business expands into new products, locations or markets;
- whether you should seek separate advice about protecting a brand through trade mark registration.
Decide who will own the company
The owners of a company are its members, commonly called shareholders. Each shareholder receives shares in the company.
You will need to decide:
- who will hold shares;
- how many shares each person will hold;
- whether all shares will carry the same rights;
- how ownership will work if a shareholder leaves, dies, becomes unable to work or wants to sell;
- whether shares will be owned personally, by a trust or by another entity.
A simple company with one owner may have one shareholder holding all ordinary shares. A business with two founders may divide ownership equally, or use another split that reflects capital contributed, roles, intellectual property or agreed responsibilities.
The number of shares does not necessarily determine the dollar value of a business. Shares are an ownership and control mechanism, so the share structure should be chosen carefully rather than copied from a generic template.
Choose directors and, if needed, a secretary
Directors are responsible for managing the company and meeting its legal obligations. A proprietary company must have at least one director who ordinarily resides in Australia. A proprietary company does not have to appoint a secretary, although it may choose to do so.
Each proposed director needs a director identification number before being appointed. A director identification number is a unique identifier that stays with the person, even if they become a director of other companies later.
The company must obtain and keep written consent from each person appointed as a director or secretary. It must also obtain written consent from each proposed shareholder.
Do not appoint a director merely as a favour or because they are a spouse, relative or business associate. A director role carries real obligations. The person should understand the company, its finances and the responsibilities they are accepting.
Select company rules
Every company needs rules for internal management. A proprietary company can generally use the replaceable rules set out in the Corporations Act, adopt its own constitution, or use a combination of both.
Replaceable rules can be a practical option for a straightforward owner-managed company. A tailored constitution may be more appropriate where there are several owners, different share classes, investor rights, succession plans or specific rules for decision-making.
If the business has more than one owner, it is also sensible to consider a shareholders’ agreement. This is separate from a constitution and can deal with practical commercial matters such as:
- decision-making and voting arrangements;
- what happens if an owner wants to leave;
- restrictions on selling shares;
- disputes between owners;
- additional funding requirements;
- payment of dividends;
- confidentiality and intellectual property.
Prepare the required addresses and registration information
A company application requires accurate personal and business information. It is worth gathering the details before you start, particularly if there are several directors or shareholders.
You will need to provide a registered office address and a principal place of business address.
The registered office is the address where official correspondence and notices for the company can be sent. It must be a physical street address in Australia, not a post office box. It does not have to be the place where the company carries on business.
For instance, a company may use its accountant’s office as its registered office. If the company does not occupy the address, it must have the occupier’s written consent and keep that consent with its company records.
The principal place of business is the physical address where the company mainly conducts business. It also cannot be a post office box.
These addresses can be publicly available through the companies register, so privacy should be considered before using a home address. This is particularly relevant for online businesses, consultants and home-based operators.
You should also have the following information ready:
- the company’s proposed name;
- the state or territory of registration;
- full names, former names, dates and places of birth, and residential addresses for officeholders;
- director identification numbers for proposed directors;
- shareholder names and addresses;
- the number, class and issue price of shares;
- whether shares are fully paid or partly paid;
- details of any ultimate holding company, if applicable;
- the company’s intended governance approach, being replaceable rules, a constitution or both.
Although a company is registered nationally, the application still requires a nominated state or territory of registration.
Complete the company registration process
Company registration is completed online through the Australian Government’s business registration system or through an authorised service provider. The corporate regulator processes the company registration.
The basic process usually follows these steps:
- Confirm that the proposed directors have director identification numbers.
Directors should obtain these before their appointment. Do not use another person’s identification details or arrange an application on their behalf without following the authorised process.
- Confirm that the proposed directors have director identification numbers.
- Check the intended company name.
Ensure the name is available and suitable. If you are not ready to register immediately but want to hold a name, it may be possible to reserve it for a limited period.
- Check the intended company name.
- Choose the company type and governance arrangements.
For many small businesses, this will be a proprietary company limited by shares. Confirm the internal management rules and whether a constitution or shareholders’ agreement is required.
- Choose the company type and governance arrangements.
- Enter the officeholder, shareholder and share structure details.
Accuracy matters. These details form part of the company’s official register and may be difficult or costly to correct if they do not reflect the intended arrangement.
- Enter the officeholder, shareholder and share structure details.
- Provide the registered office and principal place of business addresses.
Confirm that written consent has been obtained if another person or business occupies the registered office.
- Provide the registered office and principal place of business addresses.
- Pay the registration fee and submit the application.
Registration fees can change, so confirm the current amount before lodging. A private service provider may charge a separate service fee in addition to the government registration fee.
- Pay the registration fee and submit the application.
Once the company is registered, it receives an Australian Company Number, commonly called an ACN. The registration confirmation includes the company’s ACN and certificate of registration.
The company will also receive a corporate key at its registered office. This is important for accessing and managing the company’s details through the relevant online portal. Keep it secure and do not treat it as a routine password.
Set up tax, banking and record keeping after registration
Registering a company is only the first step. The company will usually need to complete a number of tax, financial and operational tasks before it begins trading.
Apply for an ABN and tax registrations
An ACN and an ABN are different identifiers.
The ACN identifies the company on the companies register. An Australian Business Number, or ABN, identifies the business for tax and business purposes. Many companies will have both.
Depending on the company’s activities, you may need to register for:
- GST;
- PAYG withholding, if the company will make payments that require tax to be withheld;
- fringe benefits tax, if the company provides relevant benefits to employees or associates;
- other industry-specific tax registrations.
GST registration is not required for every new company from day one. Whether registration is required depends on the company’s circumstances, including its projected and actual GST turnover, and some activities have special registration rules. This should be checked before invoices are issued or contracts are signed.
A company also needs its own tax file number. It should not use the tax file number of a director, shareholder or related trust.
Open a separate company bank account
A company should use a bank account in its own legal name. This helps keep company money separate from personal money and makes the bookkeeping more reliable.
Avoid paying personal expenses directly from the company account without first obtaining advice. Payments, loans, drawings and private expenses can have tax and legal consequences, particularly where the company is dealing with directors or shareholders.
A clear process for approving expenses, reimbursing staff and paying directors can reduce confusion later.
Establish bookkeeping systems early
Good bookkeeping is not just about preparing a BAS or annual tax return. It helps directors understand whether the company can pay its bills, meet tax commitments and manage cash flow.
Your system should capture:
- sales invoices and income;
- supplier bills and business expenses;
- payroll records, if staff are employed;
- superannuation payments;
- GST information, if registered;
- bank transactions and reconciliations;
- director loans and shareholder transactions;
- asset purchases, finance agreements and leases;
- copies of key contracts and resolutions.
A cloud accounting platform can assist with day-to-day records, but it does not replace the need for accurate coding, document retention and regular review. The company should maintain its own financial records and a register of members and shareholdings.
Meet ongoing ASIC responsibilities
A company has continuing obligations after registration. It is not a “set and forget” structure.
Each year, the company receives an annual statement around its review date. Directors need to check that company details are correct, pay the annual review fee and deal with the company’s solvency resolution requirements.
Company details should also be updated when changes occur. This may include changes to:
- directors or secretaries;
- residential addresses of officeholders;
- registered office or principal place of business;
- shareholdings or share structure;
- the company’s ultimate holding company;
- the location of company registers.
Changes generally need to be notified within the required timeframe rather than waiting for the annual review. Late lodgement fees may apply where changes are not reported on time.
A practical example of getting the structure right
Consider a consultant who has operated as a sole trader for several years and is now bringing a business partner into a growing advisory business.
They decide to register a proprietary company rather than simply split income informally. Before registering, they agree on ownership percentages, director roles, decision-making rights and what will happen if one owner leaves.
The company is registered with two directors and two shareholders. It applies for an ABN, sets up a dedicated bank account, registers for the tax obligations relevant to its activities and adopts bookkeeping procedures from the first month of trading.
This approach does not guarantee that every future issue will be avoided. However, it provides a clearer foundation than operating through personal accounts, informal arrangements and incomplete records.
The key takeaway
Company registration can be a valuable step for an Australian business, but the application itself is only part of the process. The more important work is choosing the right ownership structure, understanding directors’ responsibilities, setting up accurate records and keeping the company’s tax and corporate obligations up to date.
General information only: this article is not personal financial, legal or tax advice. Company structures, tax registrations and ownership arrangements should be considered in light of your specific circumstances. Speak with a registered tax agent or accountant, such as, before registering a company or changing your business structure.